Emergic: Rajesh Jain's Blog

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Politics and New Tech

December 15th, 2003 · No Comments

Washington Post asks the question: “What will happen when a national political machine can fit on a laptop?” and provides the answer built around Coase’s insight that the cost of gathering information determines the size of organizations.

the end result of the Internet revolution on companies has been exactly what Coase’s theory predicted: Cheap information has allowed firms to shrink. Size is now less of an advantage in organizations, and that means more competition in the global marketplace. For companies, it’s either reorganize or die. That’s what Coase, who won the 1991 Nobel Prize in economics, was talking about.

Coase’s ideas are no less true for political organizations, as Dean’s success shows. He is the first candidate to use the Internet effectively as a political organizing device.

To an economist, the “trick” of the Internet is that it drives the cost of information down to virtually zero. So according to Coase’s theory, smaller information-gathering costs mean smaller organizations. And that’s why the Internet has made it easier for small folks, whether small firms or dark-horse candidates such as Howard Dean, to take on the big ones.

Now anyone with a Web site and a server, a satellite transponder and about $100 million can have — in a matter of months — much of what the political parties have taken generations to build.

The Internet doesn’t reinforce the parties — instead, it questions their very rationale. You don’t need a political party to keep the ball rolling — you can have a virtual party do it just as easily.

And that’s what Howard Dean has done.

As technology spreads in India, it will be very interesting to see how politics and governance will change.

Tags: General

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